Weekly Fundamental US Stocks Forecast: Neutral

  • Seasonality research going again 20-years present August is mostly optimistic, with the second half of the month producing the vast majority of good points throughout the month.
  • US fairness markets can proceed to commerce increased within the short-term – not less than till the Federal Reserve’s Jackson Hole Economic Policy Symposium later this month.
  • The IG Client Sentiment Index means thatUS shares have a combined bias within the near-term.

US Stocks Week in Review

It was one other robust week for US fairness markets, as decelerating value pressures, per the July US inflation report, eased issues concerning the Federal Reserve persevering with alongside its aggressive charge hike path. The US S&P 500 added +3.24%, the tech-heavy US Nasdaq 100 gained +2.64%, and the small-cap centered US Russell 2000 added a formidable +4.95%. The mixed pullback in short-end US Treasury yields and volatility measures stay instrumental within the rebound transpiring throughout US fairness markets – which has formally entered bull market territory (>+20% off the lows).

Seasonality Favors Gains in US Equity Markets

The first two weeks of August have clocked good points for US fairness markets, consistent with historic tendencies. Seasonality research going again 20-years present August is mostly optimistic, with the second half of the month producing the vast majority of good points throughout the month, per information gathered from EquityClock.com.

US S&P 500 Seasonality: DAILY TIMEFRAME (20-year common) (CHART 1)

Weekly Fundamental US Stocks Forecast: Bull Market Takes Shape

Source: EquityClock.com

US Nasdaq 100 Seasonality: DAILY TIMEFRAME (20-year common) (CHART 2)

Weekly Fundamental US Stocks Forecast: Bull Market Takes Shape

Source: EquityClock.com

US Russell 2000 Seasonality: DAILY TIMEFRAME (20-year common) (CHART 3)

Weekly Fundamental US Stocks Forecast: Bull Market Takes Shape

Source: EquityClock.com

With US actual GDP monitoring at +2.5% annualized in 3Q’22 per the Atlanta Fed GDPNow development tracker, coupled with typically optimistic earnings (75% of S&P 500 corporations have reported a optimistic EPS shock and 70% have reported a optimistic income shock, per FactSet), there’s motive to imagine that US fairness markets can proceed to commerce increased within the short-term – not less than till the Federal Reserve’s Jackson Hole Economic Policy Symposium later this month.

Economic Calendar Week Ahead

The flip via the center of August guarantees a busy US financial calendar, if not in magnitude of serious information releases however in frequency of knowledge and occasions. There are solely two ‘high’ rated releases within the coming days, however the calendar sees a gentle move of data Monday via Thursday however.

– On Monday, August 15, the August US NAHB housing market index might be launched half-hour after US money fairness markets open. June US internet long-term TIC flows might be reported at 20 GMT.

– On Tuesday, August 16, July US constructing permits and housing begins might be revealed at 12:30 GMT. July US industrial manufacturing figures are due at 13:15 GMT.

– On Wednesday, August 17, weekly US mortgage purposes information might be launched at 11 GMT. The July US retail gross sales report might be reported at 12:30 GMT. June US enterprise inventories are scheduled to come back out at 14 GMT. The July FOMC minutes are due at 18 GMT. Fed Governor Bowman will give remarks at 13:30 GMT and 18:20 GMT.

– On Thursday, August 18, weekly US jobless declare might be launched at 12:30 GMT, as will the August US Philadelphia Fed manufacturing index. July US current house gross sales information and the July US Conference Board main index are due at 14 GMT. Kansas City Fed President George will give a speech at 17:20 GMT.

US S&P 500 PRICE VERSUS COT NET NON-COMMERCIAL POSITIONING: DAILY TIMEFRAME (August 2020 to August 2022) (CHART 4)

Weekly Fundamental US Stocks Forecast: Bull Market Takes Shape

Next, a glance at positioning within the futures market. According to the CFTC’s COT information, for the week ended August 9, speculators elevated their net-short US S&P 500 futures positions to 216,439 contracts, up from the 194,685 net-quick contracts held within the week prior. Positioning is probably the most net-short it has been over the previous 52-weeks, and probably the most net-short because the third week of June 2020.

IG CLIENT SENTIMENT INDEX: US S&P 500 PRICE FORECAST (August 12, 2022) (CHART 5)

Weekly Fundamental US Stocks Forecast: Bull Market Takes Shape

US 500: Retail dealer information exhibits 35.34% of merchants are net-long with the ratio of merchants quick to lengthy at 1.83 to 1. The variety of merchants net-long is 1.02% increased than yesterday and three.28% decrease from final week, whereas the variety of merchants net-short is 0.73% increased than yesterday and 10.66% increased from final week.

We usually take a contrarian view to crowd sentiment, and the very fact merchants are net-short suggests US 500 costs might proceed to rise.

Positioning is much less net-short than yesterday however extra net-short from final week. The mixture of present sentiment and up to date adjustments provides us an extra combined US 500 buying and selling bias.

— Written by Christopher Vecchio, CFA, Senior Strategist

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